Successfully Grew EBITDA Year-Over-Year in Line with Previous Guidance
On Track to Deliver Significant Enhancement in Free Cash Flow in 2015 and to Grow EBITDA
Raises Expectation for 2015 Cost Savings to Greater than $5 Million from Incremental Synergy Activities in 2015 While Supporting Growth Initiatives
Announces Successful Resolution for the Maturity of the Convertible Debentures
TORONTO, May 12, 2015 – Mood Media Corporation (“Mood Media,” “Mood” or “the Company”) (ISIN: CA61534J1057) (TSX:MM), the world’s largest integrated provider of in-store customer experience solutions, today reported results for the first quarter of 2015 and provided an update on the Company’s progress executing against its strategic and operational plans.
- Mood achieved Q1 revenues of $114.3 million and EBITDA of $24.1 million.
- Q1 EBITDA rose by 3% relative to last year, and rose by 4% on an underlying basis (excluding foreign exchange impact and asset disposals). Underlying revenues rose by 1% year over year in Q1 (excluding foreign exchange and asset disposals).
- Mood’s North America and International subscriber businesses grew EBITDA by 5.5% year over year on an underlying basis.
- The Company is successfully implementing its 2015 global transformation, integration and consolidation activities, and is tracking to achieve more than $5 million in annualized savings in 2015, with $2.4M implemented or in process to date, all ahead of its original plans.
- Mood maintains its guidance for positive free cash flow generation in 2015 and for EBITDA to rise moderately relative to 2014.
- Mood announced a successful resolution for the maturity of the convertible debentures to occur in October 2015, which lengthens its maturity schedule and reduces dilutive potential.
“We are pleased with our first quarter results and that they are in line with our expectation of increasing EBITDA despite headwinds from foreign exchange and asset disposals”, said Steve Richards, President and CEO of Mood Media. “The transformation of Mood is well underway and our first quarter results reflect our second consecutive quarter of positive underlying revenue growth and third consecutive quarter of EBITDA gains relative to the prior year. These are marked improvements relative to where the business was a year ago. Our results are on track with expectations and our performance should enable us to meet the financial outlook we provided to investors, calling for moderate growth in EBITDA in 2015 relative to 2014. We expect positive free cash flow generation in 2015 through continued EBITDA growth, reduced transaction/restructuring disbursements, stable capital expenditures and cash taxes.”
“In the quarter we continued our positive momentum and achieved our highest gross gain sales performance in North America in several years, completed the roll out of our Mobile solution across our North American platform, saw a substantial build in our Technomedia and BIS revenue pipelines which bodes well for improved performance in future quarters. We also achieved notable client wins and increased upsell and cross-sell activity. We made significant progress in implementing our integration, consolidation and efficiency programs, and have increased our targeted cost savings for 2015 to greater than $5 million”, continued Mr. Richards.
“We are also very pleased with our announcement of a fully backstopped $50 million private placement of foreign subsidiary debt that will enable us to fully repay our Convertible Debentures at maturity. It marks the culmination of months of diligent effort to improve Mood’s capital structure. The transaction delivers upon yet another Mood commitment, finalizing a solution for the convertible debentures in advance of their maturity in October 2015. We can now look forward to accelerated execution of our strategic plan as we drive growth, generate free cash flow, integrate global platforms, deliver new and compelling client solutions, and enhance Mood shareholder value. We remain committed to delivering on the strategic priorities outlined in the fall of 2013, when we began our transformation of Mood Media. We have been relentless in our focus for ensuring greater accountability across our business, benefitting all Mood stakeholders.”
First Quarter Financial Results
The Company reported Q1 revenues of $114.3 million and EBITDA of $24.1 million. Reported revenues in Q1 declined by $8.7 million relative to the prior year with underlying revenues growing by $793k, or 0.6% year over year (after the foreign exchange impact and asset dispositions). However, this underlying growth was more than offset by $9.5 million of the combined negative impact from foreign exchange translation related to the devaluation of the Euro relative to the U.S. dollar and from asset disposals (see table below). Its rendering of services revenues declined by $4.4 million relative to the prior year with foreign exchange and asset disposals contributing $5.2 million to the decline while underlying organic revenues rose by $0.8 million, or 1%. Foreign exchange also contributed to declines in sale of goods and royalty revenues, although these revenues remained stable on an underlying basis. In the first quarter, the average Euro / USD exchange rate used to translate its Euro results was $1.128 compared with $1.370 in the same period of the prior year.
The Company’s total expenses declined by $9.5 million in Q1 relative to the prior year and were stable on an underlying basis with cost of sales increasing 2% year over year on higher equipment sales in its International segment and operating expenses declining by 3% on an underlying basis reflecting continued gains from its integration and synergy activities.